A New Paradigm in Physician Retirement Planning

By Michael Ferguson
Tuesday, November 4, 2014

As healthcare providers go the extra mile for their patients, a client-focused wealth management firm does the same for physicians, partnering to help them realize their financial goals and retire on their own terms.

After a decade in the wealth management industry, Bill Strand saw the opportunity to establish a fee-based, comprehensive wealth management firm that specializes in analyzing how physicians can make better decisions about their money. As a result, Strand founded Paradigm: Strategies in Wealth Management, LLC, where he works as Principal.

This all began in the mid-1990s, when Paradigm partnered with a small medical practice to manage its 401(k) plan. Many physicians on the practice’s board were so impressed with the trust, transparency and accountability they found with the company that they chose to partner with Paradigm. The focus sharpened through an educational partnership with the AMA.

Client Engagement

Experts at Paradigm cultivate transparency by conducting frequent, sometimes quarterly, face-to-face meetings to discuss wealth strategies, which has led to long-lasting partnerships. Clients also have easy access to their assets, as well as other relevant documents, via Paradigm’s secure Web portal.

“We serve our clients through a secure online portal, electronic communications and state-of-the-art portfolio management system,” Strand says. “Our technology also allows for the aggregation of 401(k) information, permitting us to pull that, along with 403(b) assets, right into the investment mix. This enables our clients to view everything related to their financial situation through one secure portal — even funds we at Paradigm don’t actively manage.”

Accessible Expertise

One of the hallmarks of Paradigm’s service is a knowledgeable staff that is available to address client needs very quickly.

“We know physicians’ schedules are busy and often unpredictable, so we’re very flexible with our scheduling,” Strand says. “We accommodate their time constraints and have no problems meeting them before or after hospital or clinic hours; I’ve even met clients in their homes for morning coffee to discuss their finances. Our staff has 24/7 access to our secure network, so they can immediately respond to a client’s needs, even if issues arise outside normal business hours.”

“As we establish a sense of trust with our clients, they begin to rely more on our insight and experience and less on their own number crunching. Instead of spending their time looking at a portfolio or calculating the money they have, the partnership allows them to enjoy the lifestyle they envisioned. We manage their finances so they can practice medicine.”
— Bill Strand, Founder and Principal, Paradigm: Strategies in Wealth Management, LLC

Having worked together for more than 20 years, Strand and his associates are a cohesive team capable of utilizing all available resources to meet clients where they are. One month prior to each client meeting, they meet internally to identify the client’s financial challenges and opportunities, and to discuss and prioritize specific needs. These pre-meeting internal discussions establish the agenda for the meetings and elucidate future financial moves.

Financing Major Changes

In the past five years, due to changes in nearly every aspect of healthcare delivery, one of the more common questions Paradigm’s clients ask is, “How do I get out of medicine?”

“For physicians in this situation, we start by seeing if they have reached a level of financial independence where getting out of medicine is a realistic option. This is accomplished by conducting a thorough cash-flow analysis that determines how much money they need to maintain their desired standard of living throughout their retirement,” Strand explains. “Using that data, we compare their retirement goals with the level of assets they will draw on for the rest of their lives and arrive at a probability of success for realizing the retirement they desire.”

Using the probability for desired results, the Paradigm team helps physicians determine the next series of steps to meet their objectives and then helps with the logistics of making their retirement dreams a reality.

On the other end of the career timeline, many younger physicians are mired in debt when they enter the medical field. Paradigm’s experts partner with physicians to help shed their debt and manage their growing base of assets.

“We’ve helped physicians through debt loads exceeding $450,000,” Strand says. “This is obviously a huge hurdle, especially if they’re not in one of the higher-earning specialties. Often, physicians graduate from medical school and complete their postdoctoral work and want to start spending and living a nice lifestyle. We try to temper that impulse because, even though they have tremendous earning power, they should develop a habit of saving money for the future.”

Managing Post-retirement Income

Traditionally, retirement precipitated a fall to lower tax brackets, but that’s not necessarily the case anymore, according to Strand, especially if individuals have done a good job reducing their debts by paying off their mortgages, thus leaving them few itemized deductions.

“We see many physicians who are adept at investing money into 401(k) and 403(b) plans,” he says. “However, many are not developing a post-tax portfolio, which can put them in a bind when they enter their distribution or retirement years. When most of their retirement income comes out of qualified accounts, it is all taxed at their regular bracket rate. We emphasize building an additional taxable portfolio that will give us more flexibility in managing their taxes long-term. When assets are sold out of after-tax accounts, they are taxed at capital gains rates, which are generally lower than regular income rates. The combination of qualified and non-qualified accounts is what gives our clients more flexibility in managing taxes over their retirement years.”

The Best of Both Worlds

The long-lasting relationships forged between financial advisors at Paradigm and the physicians whose assets they manage are due to a commitment to establishing a partnership that hasn’t wavered since the company’s inception.

“At Paradigm, my staff and I have the knowledge, technological capability and professional network that allows us to compete toe-to-toe with massive financial firms,” Strand says. “The difference is that we’re small and client-centered. Instead of coming in and forcing clients into decisions, we’re consultative in nature. We establish long-term partnerships with our clients and their families to support them through the various stages of their financial lives.”

For more information about Paradigm, visit www.planparadigm.com or call 763-201-1025.